Sometimes I wonder if central bankers have a conspiracy to keep us ignorant of how money is created in our economy.

They use expressions like adding to their balance sheets, credit in the economy or quantitative easing all of which relate to increasing the money supply.

When central banks buy government bonds on the market or from the government they create money for the purchase and add the amount to their balance sheet. This new money injected into the economy is called high-powered money and thanks to fractional reserve banking the amount is increased by a multiplier.

The U.S. Federal Reserve Board has been criticized for not injecting high powered money into the economy early in the crisis of the 1930s. Once this process was started the economy started to pick up.

But things are different today. It appears bank lending and business spending is limited not by a lack of high-powered money but rather by a lack of opportunities.

In any case, money is such an important part of our economy that it would be good if a few more people than central bankers understood how it is created. It may take a little thinking out but I believe most of us should be able to understand the process. An afterthought: maybe central bankers use these terms because they don’t understand how money is created.

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Cover Notes

After my first family broke up I went to the University of British Columbia and did a degree in economics because I was intrigued by the way in which money is created and because I wanted to understand the dynamics of how we exchange goods and services.

I concluded economics is mostly about relationships and we should evaluate economic policies by how they contribute to good relationships.

We have two major economic problems with which we should be dealing. The first is that while we have lots of energy and mineral resources left on this planet, we have used up the most easily accessible. Those that are left require an excessive amount of energy to extract. The second major problem is that our so-called "market" economy is largely based on legislation which restricts competition and thus allows some people an unequal share of the agricultural surplus.

To deal with these problems we need to focus our economy on a policy of sharing in the same way that families and people in small-scale societies share their food. We also need a universal guaranteed income scheme AND a new way of creating money. This would be a tremendous transfer of decision-making power from governments and bankers to individuals.

In this book you will learn:

why the economic principles of marginal cost and the elasticity of the demand curve say it should be priced at 99 cents.

why relationships are an important part of economics.

what it takes to make a good relationship.

that our civilization is based upon a huge agricultural surplus which should be considered an inheritance to be shared equally by everyone.

how the financial and the physical aspects of the economy interact.

how money is created out of thin air and the problems this creates for our well being.

how we can finance a guaranteed annual income scheme.

how to become a part of the ten percent,

how not to become a slave.

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